OTS Chairman Steps Down

John Reich, Director of the Office of Thrift Supervision, on Thursday announced his resignation from the agency. Reich and Obama administration officials may have been at odds over whether the government should take part in mortgage workouts to help troubled homeowners, according to a Market Watch report. Reich said in November he had concerns about using federal funds to complete loan modification programs. Reich also disagreed with Federal Deposit Insurance Corp. Chairwoman Sheila Bair in her efforts to seek billions in government funds to modify loans for troubled borrowers. Nonetheless, the OTS on Wednesday urged, along with House Financial Services Committee Chairman Ben Bernanke, all financial institutions suspend foreclosures until Treasury Secretary Timothy Geithner and his team have hashed out the details on a $50 billion mortgage modification program. Reich was nominated director of OTS by former President George W. Bush.  In his capacity as Director, Reich also served as a member of the Board of Directors of the FDIC. Reich joined the OTS after serving since November 2002 as Vice Chairman of the FDIC Board.  He also served as Acting Chairman of the FDIC from July 2001 to August 2001. Reich’s resignation changes the make up of the FDIC board, which has five members, as it also adds to speculation that the Obama administration may consider combining the OTS and the Office of the Comptroller of the Currency. It’s possible the Obama administration could replace Reich with a chairperson whose focus would be to combine the agencies, an observer familiar with the agencies told Market Watch. “I am honored to have led this agency during one of the most challenging economic periods in U.S. history,” Reich said upon announcement of his departure.  “I am tremendously proud of the enormous efforts by OTS employees to preserve the health of the U.S. thrift industry and I feel confident that those efforts will continue under my successor.” Scott M. Polakoff, Senior Deputy Director and Chief Operating Officer, will become Acting Director upon Reich’s departure.  Pursuant to statute, Polakoff will serve in that capacity until President Obama appoints a successor. Write to Kelly Curran at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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